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Started By
Message
Trump Accounts & Funding Children’s Retirement
Posted on 2/12/26 at 11:07 am
Posted on 2/12/26 at 11:07 am
Having young children naturally persuades you to do as much as you can to provide for them. My parents paid for my college (tuition, food, and rent), which really set me up starting my true adult life after college debt free. I have a 529 and will to do the same for my children, whether they want to attend a 4 year university or trade school.
My wife and I are also fortunate enough to also contribute to the Trump accounts for each of my children. I’ve done my research on the possibility for my children to do Roth conversions in their early adult years (18-21) tax free while they’re in college (not having significant earnings) by them converting the gains (using the pro-rata rule) to Roth investments if they can stay under the Standard Deduction. This is key so the money is not taxed twice. Rough math assuming historical gains would theoretically provide them with about $9Mil at 65 with just a $60k investment by me/wife now.
$9Mil is crazy, even adjusted for inflation the net would still fully fund their retirement accounts.
I know it is not my responsibility to pay for their college/trade school education, much less their retirement. Before now, this was never a consideration. But the growth potential seems like it’s too much to pass up.
I will consult with my financial advisor as well, but want to know your take on this. Feel free to kill me on this, I want the good and the bad. Thanks
My wife and I are also fortunate enough to also contribute to the Trump accounts for each of my children. I’ve done my research on the possibility for my children to do Roth conversions in their early adult years (18-21) tax free while they’re in college (not having significant earnings) by them converting the gains (using the pro-rata rule) to Roth investments if they can stay under the Standard Deduction. This is key so the money is not taxed twice. Rough math assuming historical gains would theoretically provide them with about $9Mil at 65 with just a $60k investment by me/wife now.
$9Mil is crazy, even adjusted for inflation the net would still fully fund their retirement accounts.
I know it is not my responsibility to pay for their college/trade school education, much less their retirement. Before now, this was never a consideration. But the growth potential seems like it’s too much to pass up.
I will consult with my financial advisor as well, but want to know your take on this. Feel free to kill me on this, I want the good and the bad. Thanks
5
Posted on 2/12/26 at 11:32 am to Tifway419
Is there much difference in investing and saving for yourself and letting them inherit it?
It would compound the same.
It would compound the same.
Posted on 2/12/26 at 12:58 pm to WITNESS23
quote:
Is there much difference in investing and saving for yourself and letting them inherit it?
It would compound the same.
One difference is that his children would have a much better shot at a good financial education if he can put them in the driver's seat earlier by doing this.
Posted on 2/12/26 at 1:02 pm to CharlesUFarley
Yea, I just wonder how kids will act if you tell them they will have 9 million dollars when they get to retirement age.
That can kill drive.
Obviously different kids handle this differently, but that would be my worry.
That can kill drive.
Obviously different kids handle this differently, but that would be my worry.
Posted on 2/12/26 at 1:09 pm to WITNESS23
quote:
Yea, I just wonder how kids will act if you tell them they will have 9 million dollars when they get to retirement age.
That can kill drive.
Obviously different kids handle this differently, but that would be my worry.
Well, telling them like that is probably not a part of a good financial education.
I don't have kids, but if I did I would try to do something like that. Sure, it might be better to just load up on a Roth or a Roth conversion ladder to pay for college, etc, but it isn't always about the math.
Posted on 2/12/26 at 1:12 pm to WITNESS23
quote:I’ve thought of that too. Would also provide some additional financial security for myself/wife to keep it in my name if something catastrophic happens. The most likely, although, highly unlikely would be some major worldwide financial collapse or some sort of government overreach (extra taxation on retirement accounts).
Is there much difference in investing and saving for yourself and letting them inherit it? It would compound the same.
Posted on 2/12/26 at 1:16 pm to WITNESS23
quote:
Yea, I just wonder how kids will act if you tell them they will have 9 million dollars when they get to retirement age.
They’ll be able to eat McDonald’s for a whole week in retirement with that money
Posted on 2/12/26 at 1:16 pm to Tifway419
I don't think there is a wrong way of doing it.
I asked out of genuine curiosity.
I have kids aged 4 and 2 and I go back and forth on how to set them up financially as well.
I asked out of genuine curiosity.
I have kids aged 4 and 2 and I go back and forth on how to set them up financially as well.
Posted on 2/12/26 at 1:20 pm to WITNESS23
quote:100%. I’m going to educate them hard on personal finance (which for some terrible reason is not taught in schools) and I’ve thought about personally matching their retirement contributions up to a certain percentage in their early career years.
Yea, I just wonder how kids will act if you tell them they will have 9 million dollars when they get to retirement age. That can kill drive.
For example, I wasn’t able to max out my 401k until I reached 30. Just didn’t make enough that early in my career. But I did always contribute 15%. I would make a deal to where if they made a 30% contribution, I would gift them back 15% in cash so they’re still effectively putting in 15% and I’m putting in 15%.
Again, just struggling with the point that their retirement is not my responsibility. But I do want to set them up financially, just trying to figure out the best way to do it and not turn them into ungrateful, lazy, financially irresponsible people. Catch 22, I love them and want to give as much as possible, but don’t want to risk the negative side effects.
Posted on 2/13/26 at 10:35 am to Tifway419
I would run some different scenarios by a CPA. Several variables to consider…
I think if you’re doing Roth conversions while they’re in school and still dependents the kiddie tax rule applies and they would likely pay your tax rate on most of the conversion.
I think if you’re doing Roth conversions while they’re in school and still dependents the kiddie tax rule applies and they would likely pay your tax rate on most of the conversion.
Posted on 2/13/26 at 10:46 am to Tiger4life306
quote:I’m not well versed on the kiddie rule. My understanding, which could be wrong (I’ll consult my financial advisor of course), is that they won’t be my dependents after 18.
I think if you’re doing Roth conversions while they’re in school and still dependents the kiddie tax rule applies and they would likely pay your tax rate on most of the conversion.
At this point, they will be in college/trade school and at max make 10k or so IF they have a part time job while going to school. Anticipating the standard deduction to be $30k, that would allow them to convert the Trump account to a Roth IRA tax free if they convert less than $20k in gains (difference of standard deduction amount and their part time earnings) to the Roth in any year.
This would likely be a multi year process, but in the end would have converted the entire $100k (60k investment and $40k gains) to the Roth. That $100k Roth IRA balance at 18-20 would turn into $8-9Mil at 65.
Posted on 2/13/26 at 10:55 am to Tifway419
Indeed a huge miss is ignoring financial education of young people. We raised our kids on living below means, compounding interest, and investing, risk / reward matching for specific financial goals. You and your wife are in right headspace. Well done.
STRONGLY believe sweat equity and effort is primary path to appreciation. Appreciation is magic potion to avoiding spoiled people.
Don’t disrupt this natural order. My 2 cents. They earn it or they will not appreciate it. No appreciation and they may waste it. That simple.
In addition to above posts, offer another POV. Instead of leaving them with sizable inheritance, why not share some of it with them while you and your wife are alive?
Factor an / budget annual amount that fits into your tax bracket space (once you are retired) just for your kids (home improvement for them during their adult lives, etc).
Gratefulness via sharing how you and your wife sacrificed and utilized financial planning / discipline to enable the finds that sharing with them. Demonstrate the financial education that you gave them, so to speak.
If all things natural lifespan, God willing, otherwise you may be transferring this wealth to them when they are at their highest tax brackets in their working lives. All sorts of things to consider.
We are aiming for significant amount to transfer while we are with our kids.
Estate planning time!
Good luck!
quote:
provide them with about $9Mil at 65 with just a $60k investment by me/wife now.
STRONGLY believe sweat equity and effort is primary path to appreciation. Appreciation is magic potion to avoiding spoiled people.
Don’t disrupt this natural order. My 2 cents. They earn it or they will not appreciate it. No appreciation and they may waste it. That simple.
In addition to above posts, offer another POV. Instead of leaving them with sizable inheritance, why not share some of it with them while you and your wife are alive?
Factor an / budget annual amount that fits into your tax bracket space (once you are retired) just for your kids (home improvement for them during their adult lives, etc).
Gratefulness via sharing how you and your wife sacrificed and utilized financial planning / discipline to enable the finds that sharing with them. Demonstrate the financial education that you gave them, so to speak.
If all things natural lifespan, God willing, otherwise you may be transferring this wealth to them when they are at their highest tax brackets in their working lives. All sorts of things to consider.
quote:
I do want to set them up financially, just trying to figure out the best way to do it and not turn them into ungrateful, lazy, financially irresponsible people.
We are aiming for significant amount to transfer while we are with our kids.
Estate planning time!
Good luck!
This post was edited on 2/13/26 at 11:12 am
Posted on 2/13/26 at 11:36 am to Everyday Is Saturday
quote:Man, thank you. Haven’t considered this angle enough, think you’ve convinced me. I’ve read somewhere that generational wealth really screws the third generation. Generation 1 works hard, sets generation 2 up but they’ve watched how hard generation 1 worked. Generation 3 eventually inherits the money, didn’t witness firsthand the hard work of generation 1 and turns into lazy pricks who were born on third and think they hit a triple.
STRONGLY believe sweat equity and effort is primary path to appreciation. Appreciation is magic potion to avoiding spoiled people. Don’t disrupt this natural order. My 2 cents. They earn it or they will not appreciate it. No appreciation and they may waste it. That simple.
Posted on 2/13/26 at 1:14 pm to Tifway419
quote:
I know it is not my responsibility to pay for their college/trade school education
Hmm, as a parent, I feel like it is.
Posted on 2/13/26 at 7:47 pm to WITNESS23
quote:
Yea, I just wonder how kids will act if you tell them they will have 9 million dollars when they get to retirement age. That can kill drive. Obviously different kids handle this differently, but that would be my worry.
I think the good outweighs the bad.
Posted on 2/13/26 at 8:01 pm to Tifway419
quote:
For example, I wasn’t able to max out my 401k until I reached 30.
I was in the Army.
We did not have TSP until I was 37 and I never had a match.
I maxed it every year until I retired from the Army.
I had a business for awhile and maxed solo401k or SEPIRA each year
I worked for the state and maxed 403b and 457, and did state retirement contribution as well.
We did max IRAs, Roth IRA, whenever we were eligible to do so.
We did Coverdell ESA and later 529 plans for both kids.
I say all this to say, pay yourself first. You’ll be glad you did.
I’d probably do the Trump account, but I’m old so I don’t guess I will.
As far as spoiling them or wrecking their work ethic, I don’t think that is always the case. Some of the hardest working most dedicated people I know were born rich.
Posted on 2/14/26 at 7:29 am to Tifway419
Pretty certain that I will do it for my three kids. I read up on it and I like the benefits it offers besides retirement, such as buying a house.
I have seen different outlook from all walks of life during my time. I have been around old money families who maintained and improved their financial security, and also middle class/lower middle class co-workers who planned out their retirement spending so that they would die with only nickels left to their name, and nothing left to the family. They had the mindset that their children had to experience every single hardship that they had. I also knew similar workers who put their children above them. The old money people believed in some hardship experiences, but they also believed that family will always have a safety net, rather than be in a trap.
I'm a believer in giving loved ones altruistic boosts in life, if its affordable. Yes you don't want to enable bad behavior/fundamentals, but I really do think this will put your children in a better situation and a setup for success.
A strong family unit is key to individual success. Old money families inspired me.
I have seen different outlook from all walks of life during my time. I have been around old money families who maintained and improved their financial security, and also middle class/lower middle class co-workers who planned out their retirement spending so that they would die with only nickels left to their name, and nothing left to the family. They had the mindset that their children had to experience every single hardship that they had. I also knew similar workers who put their children above them. The old money people believed in some hardship experiences, but they also believed that family will always have a safety net, rather than be in a trap.
I'm a believer in giving loved ones altruistic boosts in life, if its affordable. Yes you don't want to enable bad behavior/fundamentals, but I really do think this will put your children in a better situation and a setup for success.
A strong family unit is key to individual success. Old money families inspired me.
Posted on 2/14/26 at 8:24 am to Mo Jeaux
quote:You can certainly feel that way. I will never look down upon someone as if they neglected a responsibility if they can’t financially pay for their children’s college. To me, financial responsibilities for children end when they turn 18. Anything after that is lagniappe.
Hmm, as a parent, I feel like it is.
Posted on 2/14/26 at 9:11 am to Tifway419
quote:
Generation 1 works hard, sets generation 2 up but they’ve watched how hard generation 1 worked. Generation 3 eventually inherits the money, didn’t witness firsthand the hard work of generation 1 and turns into lazy pricks who were born on third and think they hit a triple.
My lived experience. Worked for large IOC. Worked closely with mega distributors of our products for years, high net worth folks.
No such thing as Generation 1 in business anymore. The Generation 2's (usually sons/daughters of Generation 1) grew business within their limits and / or to PE sale. Lots of spoiled wives, but Generation 2 solid, in general.
Generation 3 sold to PE faster than grandpa's eternal head could spin.
Something in human nature...earning something vs. being given something.
Make them earn it / see it earned. This applies no matter the number of zeros in the value of the thing being transferred to the next generation. Good luck!
This post was edited on 2/14/26 at 9:13 am
Posted on 2/14/26 at 8:57 pm to Tifway419
quote:
100%. I’m going to educate them hard on personal finance (which for some terrible reason is not taught in schools) and I’ve thought about personally matching their retirement contributions up to a certain percentage in their early career years
Things I learned from my parents as well. Not sure why the answer is that everything needs to be taught in schools. Everything from baking cookies to wiping your arse to changing the oil in your car is supposed to be taught in schools. I’m not sure why people have children.
Rant over.
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